Tenant Cried Fraud to get her rent back! Rent Charge Back

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Tenant Cried Fraud to get her rent back! Rent Charge Back

Michael Taylor
Rental Property Investor · Chicago, IL · Member since 2019 · 25 posts · 29 votes

I am not sure if this post is me just venting, or use it as a warning to other landlords. I had a tenant whose business was shut down by the city of Chicago for unlawful activity in my commercial unit, to dispute the rent she paid me over the last two months and got her money back. I have my rents processed through Apartments.com (they purchased Cozy). After the city shut her down, she called her bank (BMO Harris) and disputed the charges of rent stating that it was fraud, they deducted August and September rents from my account. I went to management at my bank, and at BMO Harris (which is the bank of the tenant) and the bottom line is there is nothing I can do other than to take her to court. I am so pissed! Makes me want to stop using Apartments.com as anyone can dispute the charge and they get their money back, the banks will be on the side of the consumer not the merchant.

Are there any recommendations of other companies that I can use that will better protect me as the merchant? How are other landlords handing this issue of charge backs?

Thanks in Advance.

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Scott Mac
Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
5y

Hi Michael,

Renter is "performing" unlawful activity in your commercial unit, and you expect less than this (???)

Screen, screen, screen...

Who was the one defrauded here--it's you--that's who.

But then again, as they say "Don't expect Sinners to be Saints".

Good Luck!

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  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    5y

    If you haven't started an eviction proceeding, do that post haste.

    0Reply
  • Scott Mac
    Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    5y

    Hi Michael,

    Renter is "performing" unlawful activity in your commercial unit, and you expect less than this (???)

    Screen, screen, screen...

    Who was the one defrauded here--it's you--that's who.

    But then again, as they say "Don't expect Sinners to be Saints".

    Good Luck!

    2Reply
  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    5y

    @Michael Taylor the silver lining here is that this is a commercial unit. Not only is the eviction moratorium over, but this never would have been covered anyways since this is commercial. Get in touch with a good RE attorney ASAP. You need to get the person out of your rental as this will only go down hill from there. 

    If you decide to switch away from the freebie platforms, you will quickly realize why you were there. I am using AppFolio to manage just under 100 doors. I am paying nearly $300 per month at this point for the service and it is only marginally better in most ways than Cozy was. 

    0Reply
  • Jason Taken
    Lender · Chicago, IL · Member since 2021 · 424 posts · 145 votes
    5y

    Be careful in taking any action outside of court. In Illinois, a common-law lien is created on their personal property and any action outside of the court process (like changing the locks or what is called "self help") could result in that lien vanishing and you unintentionally relieving the tenant of any rent obligation.

    ______________________________

    Jason Taken

    Managing Attorney / Owner @ Taken Law LLC (taken-law.com)

    Principal @ Jaken Finance Group (jakenfinancegroup.com)

    0Reply
  • Patrick M.
    Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
    5y

    Check, ACH, Zelle

    0Reply
  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    5y

    @Michael Taylor - Vent away! lol That stinks, but sounds like you are handling it the right way and looking at the issue as an opportunity to figure out how to not let it happen again.  That doesn't make sense that they would just automatically give her the money back without more investigation.

    I am a big fan of www.Hemlane.com which is a similar but better platform in my opinion.  Maybe @Dana Dunford can tell us how they would handle a situation like this?

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  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    5y
    Originally posted by @Michael Taylor:

    I am not sure if this post is me just venting, or use it as a warning to other landlords. I had a tenant whose business was shut down by the city of Chicago for unlawful activity in my commercial unit, to dispute the rent she paid me over the last two months and got her money back. I have my rents processed through Apartments.com (they purchased Cozy). After the city shut her down, she called her bank (BMO Harris) and disputed the charges of rent stating that it was fraud, they deducted August and September rents from my account. I went to management at my bank, and at BMO Harris (which is the bank of the tenant) and the bottom line is there is nothing I can do other than to take her to court. I am so pissed! Makes me want to stop using Apartments.com as anyone can dispute the charge and they get their money back, the banks will be on the side of the consumer not the merchant.

    Are there any recommendations of other companies that I can use that will better protect me as the merchant? How are other landlords handing this issue of charge backs?

    Thanks in Advance.

     This has nothing to do with Apartments.com. Most any rent or bill payment system uses ACH for EFT. The ACH system is highly government regulated and the banks must follow specific laws in fraud situations. Whether it is ACH, credit cards or any form of electronic payment, you will find that consumer protection laws will favor the consumer. My wife works at a bank that is one of the countries largest ACH and credit card processors. They almost always side with the consumer to avoid running afoul of federal laws, which can result in large fines and penalties. You need to take her to court. 

    Really the only guaranteed funds for business use are cash, cashiers check or direct wire transfer. This isn't practical for day to day business, which is why tenant screening is the best protection. Even with the best screening, some bad apples get through. Your tenant may be guilty of fraud, but I am not sure in this situation that law enforcement would get involved. They are likely to refer it as a civil matter.

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  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    5y
    Originally posted by @Jonathan Klemm:

    @Michael Taylor - Vent away! lol That stinks, but sounds like you are handling it the right way and looking at the issue as an opportunity to figure out how to not let it happen again.  That doesn't make sense that they would just automatically give her the money back without more investigation.

    I am a big fan of www.Hemlane.com which is a similar but better platform in my opinion.  Maybe @Dana Dunford can tell us how they would handle a situation like this?

     Self promotion rules prohibit anyone from talking about their own business, so she is not able to respond to this tag. All banks have to follow federal laws for ACH deposits. It is not really the rent payment website, but rather their ACH processor and the sending bank that are pushing the dispute. If an ACH processor doesn't follow the rules, they can lose their ability to process and banks lose their ability to access the ACH system. 

    1Reply
  • Greg M.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
    5y

    Something doesn't add up. If she said it was fraud, they will deduct it from your account, but there is still a fraud investigation. They don't just say screw you. You should be able to easily prove that it was rent. Sounds like you didn't make enough noise.

    Someone mentioned ACH. This can easily be reversed by stating fraud. In my 9-5 I fight these a few times a year. 

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